BLD
TopBuild Corp.
$354.53
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Mild
·
Conviction
Overvalued
Trading 8.0% above fair value
You pay
$354.53
Bear
$240.62
Fair
$328.12
Bull
$415.62
Bear
$240.62
-32.1%
$18.27 × 14x + net cash
Fair
$328.12
-7.4%
$18.27 × 18x + net cash
Bull
$415.62
+17.2%
$18.27 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($18.27)
Implied Market Multiple
19.4x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $490.33 from 29 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $328.12 per share.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Wall Street's average price target is $490.33 (from 29 analysts). Our estimate is 44% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing